Misery Loves CompanyAlthough October takes the prize for financial disasters, the most miserable month ever, according to the misery index was June, 1980. From the '60s to the '80s, oil cartels, the Cold War and the Vietnam War took their toll on the economy while government monetary policy was driving up inflation and unemployment.

When Gerald Ford was running for re-election, his democratic opponent, Jimmy Carter, used the high misery index, 13.6%, as proof of Ford's inability to steer the economy. Carter became president but he unwittingly tied the rope from which he'd later hang. Under Carter's administration, a taxing regime and price controls were implemented. While this slowed inflation, it also meant that businesses were given less incentive to profit, and thus less incentive to hire. Unemployment rose sharply and the misery index hit an all-time high of 21.98%, in June of 1980. Carter lost the next election to Ronald Reagan.

An Unlikely MatchOn June 2, 1985, R.J. Reynolds, a tobacco giant, bought Nabisco, a food producer. The $4.9 billion merger set a record for non-oil mergers. The path forward for RJR Nabisco proved to be much harder, as the two managerial teams clashed. Soon the company was back in play in a drama involving every corporate raider on Wall Street. KKR won the fight, setting another record in the biggest non-oil takeover at $25 billion. The company was split up and sold off by KKR over the following years. The RJR Nabisco story has become the poster child of a decade defined by mega-mergers, hostile takeovers and leveraged buyouts. (See Corporate Kleptocracy At RJR Nabisco for the whole story.)

Alan Greenspan Takes the ReinsOn June 2, 1987, Alan Greenspan was announced as the successor to Paul Volcker, the chairman of the Federal Reserve Board. He took over a short time before one of the worst economic crises in history, the crash of 1987.

The reputation of the Clinton-Greenspan-Robert Rubin goldilocks economy has been questioned over the last year because of the easy money policies that led up to the 2007-2009 housing bubble and subsequent meltdown. Still, no one can bandy about phrases like "irrational exuberance" quite like Greenspan can.

No Fee FreezeOn June 3, 1996, the U.S. Supreme Court ruled on the case of Smiley vs. Citibank. The earlier Marquette decision gave banks and credit card companies the right to export their states' interest rate to customers in other states, even if usury in the customer's home state called for a lesser interest rate - the issue was whether the term "interest rate" included late payment charges and other fees.

South Dakota, notably, had neither a fee cap nor any usury laws, so Citibank and many other card companies set up shop there in the '70s and '80s. Citibank charged between $5 and $15 in late fees, depending on the client. Barbara Smiley was one of those hit with a $15 late fee, but she believed it was excessive, especially given that her home state of California had laws that set limits on contract penalties.

Similar cases were argued in courts all over the U.S., so the Smiley case made it to the Supreme Court in 1996, four years after it was began. The court unanimously found that fees were included under the definition of interest, meaning that Citibank was free to charge its credit card customers any amount it saw fit. Within a year of the decision, many credit card companies doubled their income from fees and the day of $50 late fees for high-risk debtors is not unthinkable. Another good reason to rein in the plastic.

Two Very Different Birthday BoysOn June 5, 1723, Adam Smith was born. He went on to author The Wealth of Nations (1776), a book that introduced the world to the invisible hand - the theory that the free market is a self-regulating system that benefits all. Sharing his birthday, but born in 1883, is John Maynard Keynes. Keynes attempted to invalidate many of the principles set forth in Smith's masterpiece. His support of public spending quickly made him the government's favorite economist. For the last century, the pendulum has swung back and forth between Smith's free market and Keynes' big government solutions. (For more, see Adam Smith And "The Wealth Of Nations".)

The Birth of the SECOn June 6, 1934, President Roosevelt signed The Securities Exchange Act. It created the SEC to police Wall Street and restore investor confidence. Oddly enough, Roosevelt picked a former market manipulator, Joseph P. Kennedy, to head up the organization. (For a complete history of the SEC, check out How The Wild West Markets Were Tamed.)

A Rogue Forex TraderOn June 6, 2002, Rogue Trader John Rusnak was indicted on bank fraud charges. Rusnak lost $691 million dollars of his bank's money in the forex markets by failing to hedge his bets on the yen. To make matters worse, Rusnak manipulated the banks system to make it appear that he was posting a profit every year, earning him access to a prime brokerage account with which he lost even more money. Rusnak was fined $1 million and sentenced to seven and a half years in prison. (Read the whole story in How did currency trader John Rusnak hide $691 million in losses before being caught for bank fraud?)

That's all for this week. Next week marks a big market hiccup, a very bizarre rogue trader and much more.